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Britain’s unemployment rate has hit its highest level in almost five years and wage growth has fallen further, with young people particularly struggling in a tight jobs market, official data showed.
National Statistical Office (ONS) said the unemployment rate rose to 5.1% in the three months to October, from 5% in the three months to September.
This is the highest since the first quarter of 2021 – but after the pandemic era ended, it is the highest since the beginning of 2016.
The ONS said average regular pay growth also bounced back, rising to 4.6% in the three months to October, down from a revised 4.7% in the previous three months, and 0.9% higher after taking into account consumer price index (CPI) inflation.
Experts said the easing of wage hikes will strengthen the case for the Bank of England to cut interest rates when it decides on Thursday, as it will help ease policymakers’ fears over inflation.
The latest data estimated the number of workers on payrolls fell by 38,000 during November – the biggest decline in five years – to 30.3 million in evidence of a weak jobs market.
The ONS said young workers are struggling in a tough recruitment environment, with the number of unemployed aged 18 to 24 rising by 85,000 in the three months to October – the biggest rise since November 2022.
Liz McCann, ONS director of economic statistics, said: “The overall picture remains a weak labor market.
“The number of employees on payroll declined again, reflecting slower hiring activity, while companies told us there were fewer jobs in the latest period.
“This weakness was also reflected in the increase in the unemployment rate while vacancies remained broadly stable.
“The decline in payroll numbers and the increase in unemployment have been seen particularly among some younger age groups.”
The ONS said unemployment among those aged 25 to 34 rose by 47,000, while it was 28,000 higher for those aged 16 and 17.
Across the market, vacancies declined slightly between September and November, down 2,000 to 729,000.
Martin Beck, chief economist at WPI Strategy, said: “The latest UK labor market data delivered a fresh set of worrying signals suggesting that the long-running downturn is still underway.
“With a continued decline in employment and wage growth under pressure from a fragile economy, the data will provide another reason for the Bank of England to monetary policy committee “To support an interest rate cut this week.”
He said there was no repeat of the shock to the jobs market caused by the rise in National Insurance Contributions (NICs) in April, with the recent autumn Budget risking worsening troubles.
“Further policy pressures – particularly another major increase in national living wage New obligations on employers from employment rights legislation next April – there is a risk of increasing tensions at the point when the labor market can least afford it,” he said.